India-UK dairy sector profit squeeze

In late July 2026 the Indian government clarified that it has no plan to set a Minimum Support Price for milk, insisting that prices will remain market‑linked. At the same time it highlighted a wave of dairy‑sector initiatives, including the creation of over 36,000 new village‑level cooperative societies, expansion of chilling and testing capacity, and a sharp rise in milk production.

A few days later reports from both India and the United Kingdom showed that dairy farms were feeling the strain of falling milk prices and rising input costs. In the UK, volatile milk prices and higher fertilizer and fuel costs were squeezing farm margins, prompting the AHDB to issue cash‑flow tools and efficiency guidance. In India, the Aavin Federation recorded a Rs 120 crore loss, the worst since the pandemic, as subsidised milk sales and reduced daily procurement pushed the cooperative to reconstitute milk with skimmed‑milk powder, raising costs above retail levels. Aavin called on the government for higher procurement and retail prices and outlined plans to boost full‑cream milk purchases and value‑added product sales.

The sequence shows a shift from policy reassurance and sector expansion in India to immediate profitability challenges in both countries as market‑linked pricing exposes producers to price volatility and cost pressures.